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Internal Wage Structures and Organizational Performance

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  • P. B. Beaumont
  • R. I. D. Harris

Abstract

This paper considers whether a hierarchical or compressed wage structure is positively associated with relatively high levels of organizational performance. To date, there has been little empirical research in this area (especially in the UK). Thus we present an operational measure of a compressed/hierarchical wage structure, using UK manufacturing micro-data in five industrial sectors, and examine its relationship with labour productivity. We find that the wage compression argument holds in one sector but not for the majority of sectors and that taking into account other, intra-industry characteristics, namely size and ownership differences, further weakens the relationship. Copyright Blackwell Publishing Ltd/London School of Economics 2003.

Suggested Citation

  • P. B. Beaumont & R. I. D. Harris, 2003. "Internal Wage Structures and Organizational Performance," British Journal of Industrial Relations, London School of Economics, vol. 41(1), pages 53-70, March.
  • Handle: RePEc:bla:brjirl:v:41:y:2003:i:1:p:53-70
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    References listed on IDEAS

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    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
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    Cited by:

    1. Christian Grund & Niels Westergaard-Nielsen, 2008. "The Dispersion of Employees' Wage Increases and Firm Performance," ILR Review, Cornell University, ILR School, vol. 61(4), pages 485-501, July.
    2. repec:lan:wpaper:4012 is not listed on IDEAS
    3. Benoît Mahy & François Rycx & Mélanie Volral, 2011. "Does Wage Dispersion Make All Firms Productive?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(4), pages 455-489, September.
    4. Benoît Mahy & François Rycx & Mélanie Volral, 2011. "Wage Dispersion and Firm Productivity in Different Working Environments," British Journal of Industrial Relations, London School of Economics, vol. 49(3), pages 460-485, September.
    5. repec:lan:wpaper:3727 is not listed on IDEAS
    6. repec:lan:wpaper:3621 is not listed on IDEAS
    7. Peiyi Yu & Bac Luu, 2016. "Bank performance and executive pay: tournament or teamwork," Review of Quantitative Finance and Accounting, Springer, vol. 47(3), pages 607-643, October.
    8. Egon Franck & Stephan Nüesch, 2007. "Wage Dispersion and Team Performance - An Empirical Panel Analysis," Working Papers 0073, University of Zurich, Institute for Strategy and Business Economics (ISU).
    9. Nils Braakmann, 2008. "Intra-firm wage inequality and firm performance – First evidence from German linked employer-employee-data," Working Paper Series in Economics 77, University of Lüneburg, Institute of Economics.
    10. Christian Grund & Niels Westergaard-Nielsen, 2008. "The Dispersion of Employees' Wage Increases and Firm Performance," ILR Review, Cornell University, ILR School, vol. 61(4), pages 485-501, July.
    11. repec:lan:wpaper:3619 is not listed on IDEAS
    12. A I Petrescu & R Simmons & S Bradley, 2004. "The impacts of human resource management practices and pay inequality on workers' job satisfaction," Working Papers 542602, Lancaster University Management School, Economics Department.

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